With a market capitalization of more than $37 billion, eBay is by no means a small business. But the eBay phenomenon has enabled hundreds, even thousands of small businesses. One start-up is thriving by helping customers auction off their unwanted stuff.

Garages are mythic in Silicon Valley. Walter Hewlett and Dave Packard started in Palo Alto garage. Steve Jobs and Steve Wozniak started Apple Computer in another Palo Alto garage.

But Auction Drop, a small Silicon Valley start-up, hopes to make millions clearing the junk out of everyday garages.

And it’s turned the idea into a hot new small business.

“You drop if off, we sell it on eBay,” said company CEO Randy Adams. “If you have something you want to sell, just drop it off, it’s as easy as that.”

Customers bring their old stuff to one of three Auction Drop storefronts — they call it an “inlet,” not an outlet — where the item is taken in. There, it’s given a quick appraisal, put in a bin, bar-coded, and carted off to the central Auction Drop warehouse. The item then makes its way by conveyor belt, is digitally photographed, and moves to the listing agent who inspects it to determine the item’s condition.

The listing is then typed into eBay’s system, and the eBay auction begins

“We’re trying to make it easy for people who have a lot of things sitting around,” said Adams. “We’re trying to make it easy to sell those [things] and get cash for them.”

The key for Auction Drop is that it’s a physical location for eBay — it’s bricks meeting clicks. And what they’re finding out about their customers is interesting. Eighty percent have never used eBay before and, even here in the heart of Silicon Valley, fifteen percent don’t even have e-mail addresses. Think of it as a cure for Web phobia.

In just seven months, Auction Drop has auctioned off over 10,000 items — just about anything you can think of — from mink coats to consumer electronics, Kate Spade purses to diamond rings.

As it’s worth at least $50, and weighs less than 150 pounds, Auction Drop will auction it off — in exchange for a percentage of the sale price. The company has already auctioned over $1 million worth of goods, and plans to triple the number of stores in the next year, expanding from San Francisco area to Los Angeles

“We are generating cash for people that is essentially found money,” said Adams. “It’s sitting around their house. They never thought that it would generate that much cash and we help them.”

They’re turning garbage into gold — Silicon Valley style.

© 2011 MSNBC Interactive

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